World Bank to Loan Kenya 1.8 Trillion - Money News Brief

In today’s money news brief, we take a look at a new Ksh1.8 trillion loan from the World Bank, good news for farmers as the government releases funds to buy excess milk and stabilise prices. 

Also, you should expect to pay a higher power bill soon after Kenya Power was allowed to recover some Ksh6.5 billion that was lost when the government extended the 15% tariff cut and Posta employees have hope of receiving their salaries that have remained unpaid for five months following a Parliamentary intervention.

Plus, what skills are most in demand by Kenyan Employers; TVET graduates have a reason to stay hopeful - a new report shows. 

Let’s dive in.

New Ksh1.8 Trillion World Bank Loan on its Way

The World Bank Group has announced a new $12 billion (Ksh1.2 Trillion) loan package for Kenya, set to be disbursed over the next three years starting July 2024. 

The funds aim to support Kenya's goal of becoming an "upper-middle-income country by 2030." 

The financial package, subject to approval, includes money from various World Bank entities, such as the International Development Association and the International Bank for Reconstruction and Development. 

The funds will likely be allocated to sectors like energy, health, transport, and water. This support comes as Kenya grapples with financial challenges stemming from the COVID-19 pandemic and climate change-induced droughts. 

Additionally, Kenya faces liquidity issues leading up to the maturity of a $2 billion Eurobond in June. The announcement comes after a recent staff-level agreement between Kenya and the International Monetary Fund (IMF), unlocking immediate access to $682 million and increasing the current lending program by $938 million. 

Govt Sets Aside Ksh1 Billion to Buy Excess Milk from Farmers

In response to a significant drop in milk prices, the government has allocated Ksh1 billion to New Kenya Cooperative Creameries (New KCC) to stabilise the market, addressing concerns raised by dairy farmers who reported prices falling to less than Sh35 per litre. 

Agriculture CS Mithika Linturi has announced a revised minimum price of Ksh45 per litre to support dairy farmers. Moreover, the government is planning to establish a Ksh3 billion milk price-stabilisation fund, to be implemented by New KCC. 

This fund aims to purchase excess milk from farmers, which will then be converted into long-life products and stored in the Strategic Food Reserve. Linturi emphasised the government's commitment to supporting farmers in various sectors and ensuring the stability and prosperity of the dairy subsector. 

Kenya Power to Recover Lost Revenue From Consumers

The Energy and Petroleum Regulatory Authority (EPRA) has approved Kenya Power's request to recover Sh6.5 billion lost during the three-month extension of a 15% tariff cut offered by President William Ruto's government. 

This move has cost repercussions for over 9.2 million customers, with increased power bills in an environment of rising costs induced by rising fuel costs and the falling Shilling. 

EPRA's confirmation allows Kenya Power to recover the amount through pass-through mechanisms. 

The tariff cut extension, initiated by Ruto's administration, did not provide a mechanism for Kenya Power to be compensated by the government, hence the EPRA nod to recover the amounts from consumers. 

Kenya Power, which earlier in April raised tariffs, will now deduct the amount from consumers, impacting power consumers in the country.

MPs Provide Intervention for Posta’s Ksh504M Salary Arrears

Parliament's departmental committee on Communication, Information, and Innovation has proposed a solution to the financial crisis faced by the Postal Corporation of Kenya (PCK). 

The committee recommends adding Ksh800 million to the State department for broadcasting and telecommunications to address Posta Kenya's Ksh504 million salary arrears and operational expenses. 

Furthermore, the Budget and Appropriation Committee suggests a direct deduction of pending bills owed by various government entities to Posta Kenya or a special allocation for debt settlement. 

Posta Kenya is grappling with delayed salary payments, with employees not paid for at least five months. The corporation, facing financial constraints and owed over Sh2.7 billion by government agencies, is considering laying off 504 employees in February 2024 amid declining revenues and increased competition in the mail and parcel delivery sector.

Various government agencies owe Posta Kenya over Ksh2.7 billion, including Ksh1.6 billion from the Huduma Centre for rentals and Ksh1.2 billion from the IEBC for courier services.

Survey Reveals Skills Most Demanded by Employers

A recent survey conducted by the Federation of Kenya Employers (FKE) in collaboration with the Africa Digital Media Institute (ADMI) and Nexford University highlights the evolving demands for skills in Kenya's workforce. 

Among the key findings, the survey reveals significant demand for skills in transport and logistics, indicating a pivotal shift in workforce requirements. 

The study, targeting FKE members from diverse sectors with 521 participating enterprises, identifies information technology (28.4%), finance and business management (27.4%), engineering (19.2%), transportation, distribution, and logistics (18.6%), and legal (18.2%) as the sectors with the highest demand for skills. 

Educational qualifications sought by enterprises predominantly include undergraduate degrees (43.8%) and Technical and Vocational Education and Training (TVET) qualifications (34.9%). 

The report emphasises the critical intersection of education and industry needs and calls for collaboration among educational institutions, businesses, and policymakers to foster a skilled and agile workforce. 

The survey also highlights the importance of social skills, with effective communication (49.1%) identified as the most crucial skill, followed by critical thinking, teamwork, and time management. 

The findings underscore the challenges of skill mismatches in a rapidly evolving job market and the importance of upskilling efforts by both employers and educators.

Learn more in detail about this report here.